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Eyewear giant EssilorLuxottica has agreed to buy American streetwear brand Supreme for $1.5bn, expanding its brand portfolio beyond eyewear for the first time.
The Franco-Italian group said it had agreed to buy the label from VF Corporation, which also owns Vans, The North Face and Timberland and acquired Supreme four years ago for $2.1bn.
In a joint statement on Wednesday EssilorLuxottica’s chief executive Francesco Milleri and deputy Paul du Saillant said they saw an “incredible opportunity to bring an iconic brand like Supreme” into the company.
“It perfectly aligns with our innovation and development journey, offering us a direct connection to new audiences, languages and creativity,” they said.
EssilorLuxottica shares fell almost 3 per cent in Wednesday morning trading, leaving them up by more than 10 per cent over the past 12 months.
Supreme started life as a skateboarding and urban fashion label in New York before expanding to Asia and Europe. It currently has an online business and 17 global stores.
Its founder James Jebbia said EssilorLuxottica was a unique partner and the deal would allow Supreme to focus on the brand and its products.
Bernstein analyst Luca Solca said the acquisition was “surprising on two counts: [first] it seems outside of the eyewear ‘comfort zone’ [and] it appears to be geared towards streetwear, at a time when streetwear brands [are struggling]”.
EssilorLuxottica, which owns brands such as Ray-Ban and Oakley, was created in 2017 through the €50bn merger of the late Leonardo Del Vecchio’s eyewear group Luxottica and French lens manufacturer Essilor. It is the world’s largest eyewear manufacturer.
The company last year launched a revamped version of its audio-video embedded glasses in partnership with Meta, and acquired an Israeli hearing technology start-up to develop glasses fitted with its acoustic beamforming technology.
People close to the deal said EssilorLuxottica did not “suddenly” want to expand into apparel but Supreme’s platform and its wealth of data on Gen Z consumers would be a way to tap younger consumers.
Separately, EssilorLuxottica also said it was buying a majority stake of 80 per cent in Heidelberg Engineering, a German company that specialises in diagnostic solutions, digital surgical technologies and healthcare IT for clinical ophthalmology.
The Italian group’s expansion has been a pillar of Milleri’s growth strategy since taking the helm of the company in 2016 from its billionaire founder, one year before the complex takeover of Essilor.
In recent months VF has come under pressure from activist investor Engaged Capital, which called for the company to cut costs and review potential divestments among other changes.
In February, VF announced it was adding a new board member after talks with Engaged Capital, and that it planned to appoint another new independent board member agreed to by the investment group.
